Fundamental
Overview
The main theme in the last
couple of weeks has been the selling of US assets. Stock, bonds and the US Dollar
have been under strong selling pressure in what looks like a general deleveraging
from US assets in favour of safe havens like gold, which has been printing new
all-time highs almost every day.
On the JPY side, the
currency has been driven mainly by global events rather than domestic
fundamentals. The negative impact on the economy from tariffs uncertainty and
the downward pressure on inflation from the surging yen and lower commodity
prices, will keep the BoJ on the sidelines for the time being.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY finally reached the key 140.00 handle. This is where we can
expect the buyers to step in with a defined risk below the level to position
for a correction into the major trendline.
The sellers, on the other hand, will want to see the price continuing lower to
increase the bearish bets into the 137.00 handle next.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that once the 142.00 support
gave way, the sellers piled in more aggressively and pushed the pair into the
140.00 handle. From a risk management perspective, the sellers will have a
better risk to reward setup around the minor downward trendline to position for
further downside. The buyers, on the other hand, will want to see the price
breaking above the trendline to start targeting the next major trendline around
the 147.00 handle.
USDJPY Technical Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see that the pair briefly probed below the 140.00 handle but chasing the move
lower at these levels looks bad from a risk to reward perspective. We can see
that we have a minor downward trendline defining the momentum on this timeframe.
The sellers will likely lean on the trendline to position for a drop below the
140.00 handle, while the buyers will look for a break higher to target a move
into the 142.00 resistance. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we have the Japanese and US Flash
PMIs. On Thursday, we get the latest US Jobless Claims figures, while on
Friday, we conclude the week with the Tokyo CPI.
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